The overlay has ebuilds for managing the boot image evolution LED notification plugin possibly more after this list is not maintained anymore

emerge evolution-ac100-leds
emerge eselect-ac100boot

Kernel boot

The easiest solution is to compile a custom kernel and initrd. There have been improvements, but this particular description is now outdated. The rootfs is stored on an sd card. The author currently uses the original kernel image, in combination with a modified initrd:
add busybox executable along with some symlinks to it
edit init.rc config file so it only starts adbd (example attached)

You might want to use -va for big builds, to check if everything was downloaded properly. (Download size should be 0)

Workarounds

Thumb vs. ARM

The Thumb instruction set is somewhat more limited, but more memory-efficient than the ARM set. Some packages do not compile when the Thumb instruction set is used. GLib may fail to build because of inline asm that is not supported in Thumb. GConf may also fail.

Wifi improperly detected

HAL did not properly detect that ra0 is a wifi interface. Insert the attached file 10-ralink.fdi into /etc/hal/fdi/information/10-hacks/ to change ra0 into a wifi interface.
The ralink driver in wpa supplicant did not seem to work properly. wext is known to work.

Permission problems

The android kernel provides security for apps by granting 'permissions'. Apps run with different user ids and their groups define their permissions. Your user will need to be in (numeric) groups:
1001 .. 1010 (inclusive), 3001 .. 3002 (inclusive)

This will enable network access and possibly more. Sound still requires root ().

Screen blanking

The backlight can be turned off when gnome-screensaver is active.
Make sure you have SSH or ADB shell access in case of an error.